WVC 11 - 13 R- 3
§11-13R-3. Definitions.
(a) General. -- When used in this article or in the
administration of this article, terms defined in subsection (b) of
this section have the meanings ascribed to them by this section
unless a different meaning is clearly required by either the
context in which the term is used or by specific definition in this
article.

(b) Terms defined. --

(1) "Base amount" means:

(A) The average annual combined qualified research and
development expenditure for the three taxable years immediately
preceding the taxable year for which a credit is claimed under this
article;

(B) For a taxpayer that has filed a tax return under article
twenty-three of this chapter for fewer than three but at least one
prior taxable year, determined on the basis of all filings by the
taxpayer's controlled group, the base amount is the average annual
combined qualified research and development expenditure for the
number of immediately preceding taxable years, other than short
taxable years, during which the taxpayer has filed a tax return
under article twenty-three of this chapter; or

(C) For a taxpayer that has not filed a tax return under
article twenty-three of this chapter for at least one taxable year,
determined on the basis of all filings by the taxpayer's controlled
group, the base amount is zero.

(2) "Commissioner" and "Tax Commissioner" are used
interchangeably herein and mean the Tax Commissioner of the State
of West Virginia or his or her delegate.

(3) "Controlled group" means a controlled group as defined by
section 1563 of the Internal Revenue Code of 1986, as amended.

(4) "Corporation" means any corporation, limited liability
company, joint-stock company or association and any business
conducted by a trustee or trustees wherein interest or ownership is
evidenced by a certificate of interest or ownership or similar
written instrument.

(5) "Delegate" in the phrase "or his or her delegate," when
used in reference to the Tax Commissioner, means any officer or
employee of the State Tax Division of the Department of Tax and
Revenue duly authorized by the Tax Commissioner directly, or
indirectly by one or more redelegations of authority, to perform
the functions mentioned or described in this article.

(6) "Eligible taxpayer" means any person that is subject to
the tax imposed by article twenty-three or article twenty-four of
this chapter that is engaged in qualified research and development
that has paid or incurred investment in qualified research and
development credit property or that has paid or incurred qualified
research and development expenses as defined in section four of
this article. In the case of a sole proprietorship subject to
neither the tax imposed by article twenty-three nor the tax imposed
by article twenty-four, the term "eligible taxpayer" means any sole proprietor who is subject to the tax imposed by article twenty-one
of this chapter and who is engaged in qualified research and
development that has paid or incurred investment in qualified
research and development credit property or that has paid or
incurred qualified research and development expenses as defined in
section four of this article.

(7) "Partnership" includes a syndicate, group, pool, joint
venture or other unincorporated organization through or by means of
which any business, financial operation or venture is carried on,
and which is not a trust or estate, a corporation or a sole
proprietorship. The term "partner" includes a member in such a
syndicate, group, pool, joint venture or other organization.

(8) "Person" includes any natural person, corporation, limited
liability company or partnership.

(9) "Qualified research and development credit property" means
depreciable property purchased for the conduct of qualified
research and development.

(10) "Research and development" means systematic scientific,
engineering or technological study and investigation in a field of
knowledge in the physical, computer or software sciences often
involving the formulation of hypotheses and experimentation for the
purpose of revealing new facts, theories or principles or
increasing scientific knowledge which may reveal the basis for new
or enhanced products, equipment or manufacturing processes.

(A) Research and development includes, but is not limited to, design, refinement and testing of prototypes of new or improved
products or equipment or the design, refinement and testing of
manufacturing processes before commercial sales relating thereto
have begun. For purposes of this section, commercial sales
includes, but is not limited to, sales of prototypes or sales for
market testing.

(B) Research and development does not include:

(i) Market research;

(ii) Sales research;

(iii) Efficiency surveys;

(iv) Consumer surveys;

(v) Product market testing;

(vi) Product testing by product consumers or through consumer
surveys for evaluation of consumer product performance or consumer
product usability;

(vii) The ordinary testing or inspection of materials or
products for quality control;

(viii) Management studies;

(ix) Advertising;

(x) Promotions;

(xi) The acquisition of another's patent, model, production or
process or investigation or evaluation of the value or investment
potential related thereto;

(xii) Research in connection with literary, historical or
similar activities;

(xiii) Research in the social sciences, economics, humanities
or psychology and other nontechnical activities; and

(xiv) The providing of sales services or any other service,
whether technical service or nontechnical service.

(B) An individual, corporation, limited liability company,
partnership, association or trust that is in control of the
taxpayer;

(C) A corporation, limited liability company, partnership,
association or trust controlled by an individual, corporation,
partnership, association or trust that is in control of the
taxpayer; or

(D) A member of the same controlled group as the taxpayer.

For purposes of this article, "control", with respect to a
corporation, means ownership, directly or indirectly, of stock
possessing fifty percent or more of the total combined voting power
of all classes of the stock of the corporation entitled to vote.
"Control", with respect to a trust, means ownership, directly or
indirectly, of fifty percent or more of the beneficial interest in
the principal or income of the trust. The ownership of stock in a
corporation, of a capital or profits interest in a partnership or
association or of a beneficial interest in a trust is determined in
accordance with the rules for constructive ownership of stock provided in section 267(c) of the United States Internal Revenue
Code of 1986, as amended, other than paragraph (3) of that section.
(12) "Taxpayer" means any person subject to the tax imposed by
article twenty-three or twenty-four of this chapter or both. In
the case of a sole proprietorship subject to neither the tax
imposed by article twenty-three nor the tax imposed by article
twenty-four, the term "taxpayer" means any sole proprietor who is
subject to the tax imposed by article twenty-one of this chapter.
(13) "This code" means the Code of West Virginia, 1931, as
amended.

(14) "This state" means the State of West Virginia.
Note: WV Code updated with legislation passed through the 2016 Regular Session
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